Mori Building Co., Japan’s largest closely held developer, is planning projects in central Tokyo worth an estimated ¥1 trillion with its partners, as the city prepares for the Olympic Games in 2020.
Mori is opening Tokyo’s second-tallest building next week, and plans to develop about 10 projects over the next decade in Minato ward, President and Chief Executive Officer Shingo Tsuji said at a press conference in Tokyo on Wednesday.
Developers are boosting investments ahead of the Tokyo Olympics in six years, as vacancy rates decline and rents climb.
They are also betting on a strategic zoning plan announced in March as part of the government’s plan to stimulate economic growth. Mori’s announcement follows the biggest share sale plan in 32 years by Mitsui Fudosan Co., the nation’s biggest publicly traded developer, last week.
“The Toranomon area has great potential,” Tsuji said. “We would like to speed up the revitalization of the area.”
The government has designated strategic zones, including the region around Tokyo, which will offer lower corporate taxes and relaxed building restrictions to lure investment, according to a proposal announced on March 28.
The 52-story Toranomon Hills, which will open on June 11, is Mori’s biggest project since the $2.2 billion Roppongi Hills development in downtown Tokyo in 2003.
The building in Toranomon consists of office, residential and retail space over 244,360 sq. meters, according to Mori. The 247-meter tower, near the U.S. embassy compound and government buildings, including the Diet, will be the second tallest after Mitsui Fudosan’s Tokyo Midtown, according to Mori.
The completion of the new building coincides with Prime Minister Shinzo Abe’s efforts to revive the world’s third-largest economy.
Toranomon Hills is “almost completely full,” Tsuji said. Tenants of the skyscraper, include the Andaz Tokyo hotel under Hyatt Hotels Corp.; Asatsu-DK Inc., Japan’s third-largest advertising company; and Nishimatsu Construction Co., according to Mori Building.
Tokyo’s office vacancy rate fell to 6.6 percent in April from 8.5 percent a year earlier and is at its lowest since March 2009, according to Miki Shoji, a closely held office brokerage company. Average office rents gained for the fourth straight month in April, the longest run of increases since the period to June 2008, it said.
Toranomon, or tiger’s gate, is named after an old gate that once guarded the neighborhood, which was home to samurai during the Edo Period (1603 to 1867), according to Mori Building’s website. The area is aiming to compete with the city’s main business districts of Otemachi and Marunouchi.
Before World War II, the streets were filled with restaurants where geishas played shamisen and sang to their clients, according to the website, citing Masafumi Aoki, a resident who has lived in the area since the 1930s.
The new complex looms over Loop Road No. 2 that connects central Tokyo to the bay area where one of the two competition zones will be located for the 2020 Olympic Games.
Abeno Harukas in Osaka is Japan’s tallest building, at 300 meters, according to the Chicago-based Council on Tall Buildings and Urban Habitat. That tower opened its doors to the public earlier this year.